 "Hindalco, Balco feel pressure due to cheap imports")
"Realisations are not strong due to weakness in global aluminium prices. If cheap imports have to eat up the domestic demand, aluminium producers like us are not able to take even the volume advantage prevailing in the domestic market. In such a scenario it becomes difficult to push up earnings," said Ramesh Nair, chief excecutive officer at Balco.
Balco, part of Anil Agwarl-led Vedanta, has major operations in Korba town of Chhattisgarh. Mumbai-based Vedanta also has another aluminium business in Jharsuguda area of Odisha.
Domestic aluminium industry comprises three major players led by Aditya Birla Group company Hindalco Industries, state-owned National Aluminium Co (NALCO) and two aluminium businesses under Vedanta.
India's total domestic aluminium consumption, which stands at three million tonnes at present has a total installed capacity of four million tonne. With nearly half the consumption getting eaten up by cheap imports mainly from China, it is obvious that primary aluminium producers are not running plants at full capacity.
"At Hirakud, we have cleaned up several inefficencies and will take a call on restarting of idle capacity lines in the fourt quarter as demand-supply equation also needs to be watched," said Satish Pai, managing director of Hindalco Industries.
The Aditya Birla Group company reported strong operating margins in the June quarter mainly because of lower expenses as realisations remained weak hurting toplines even as volumes in aluminium picked up significantly.
Hindalco's aluminium production increased 17 percent on year-on-year basis to 308,000 tonne in June quarter leading to increased topline of Rs 4,263 crore, up seven percent from last year. The average London Metal Exchange prices for aluminium was lower by 11 percent in the period under review, while earnings before interest, taxes, depreciation and ammortisation gained 63 per cent from last year.
Noting the pressure, Hindalco Industries as part of the Indian Aluminium Association has made respresentation to the government for protective measures for the aluminium industry and is hopeful that the government will soon come to the rescue of the industry.
Unlike the steel industry, which has managed to get strong support from the government in the past couple of years, domestic aluminium industry has not been able to make itself heard.
"Steel industry has been fighting for a longer period so to that extent it is going to take time for the aluminium industry to grab the mind spaceof the government. Nevertheless, initiatives have been taken on several front to place measures for the industry in terms of safeguard duty, minimum import price and also an anti-dumping duty," said Pai of Hindalco. "Hopefully, we will soon hear from the government," he added.
India being the world's fifth largest bauxite producer should ideally be an exporter and not an importer, said industry officials.
"If imports wash out the domestic consumption in this manner, the investments made by domestic players makes no sense and is infact the entire Make In India philosophy goes for a toss," said Nair of Balco.
In the past two years, the government has only raised the import duty once by 2.5 per cent taking it to 7.5 per cent. "Its time the Indian aluminium industry becomes competitive at the global level now. You no more get captive coal or bauxite resources, evertthing is auctioned. So to that extent the industry has a level playing field, this now needs to be supported by the government by ensuring that no unfair competition hurts the market," said Pai.